BancorpSouth Offers Early Retirement to Cut Costs

BancorpSouth (BSX) in Tupelo, Miss., is offering early retirement to about 10% of its workforce in an attempt to cut costs.

The $13.4 billion-asset company offered voluntary early retirement to 418 employees, BancorpSouth said Tuesday. The offer includes improved pension benefits based on the employees' age and length of service. So far, 194 employees have accepted the offer and roughly 100 have declined. The rest of the responses are pending.

BancorpSouth will take a one-time charge of $8 million to $16 million in the second quarter in connection with the offer. The program will result in an annual savings of $7 million to $12 million, it said.

Dan Rollins has emphasized cost cutting since succeeding Aubrey Patterson as BancorpSouth's chief executive in November. Rollins said during a conference earlier this year that he hopes to save 2.5% of the company's expenses through across-the-board cuts.

The company's noninterest expense fell less than 1% in the first quarter compared to a year earlier, as salaries and benefit costs rose 6%, to $79.4 million.

"This voluntary early retirement opportunity is part of an ongoing initiative designed to improve efficiency and reduce costs," Rollins said in a press release. "We believe this program will appropriately recognize the contributions and service of eligible employees who choose to participate, while also providing BancorpSouth an opportunity to improve its cost structure going forward."

BancorpSouth's senior executives and certain other employees are not eligible for the early-retirement program.

Employees who accept the early retirement offer can receive additional pension benefits either as a lump sum or as an annuity. BancorpSouth may take an additional charge of $8 million to $13 million if the bank's lump-sum payouts exceed $16.7 million, which would reduce annual pension costs by $700,000 to $1.2 million over the next 11 years, it said.